Liff v. Office of the Inspector General for the U.S. Department of Labor , 156 F. Supp. 3d 1 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STEWART LIFF, et al.,
Plaintiffs,
v. Civil Action No. 14-1162 (JEB)
OFFICE OF THE INSPECTOR
GENERAL FOR THE U.S.
DEPARTMENT OF LABOR, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiff Stewart Liff, an experienced consultant in public-sector human-resources
management, says he and his eponymous firm, Stewart Liff & Associates, have been wrongfully
impugned by several arms of the federal government. Both thus sued the U.S. Department of
Labor, its Office of Inspector General, the Office of Personnel Management, and several DOL
and OPM officers. They allege that Defendants violated both the Fifth Amendment and the
Administrative Procedure Act by falsely suggesting, in public statements and documents, that
Plaintiffs lacked integrity and good character, and that those statements broadly curtailed their
ability to secure government contracts. Defendants now move to dismiss, identifying a series of
impediments that they maintain blocks this suit. As most are not insuperable at this stage, the
Court will largely deny the Motion and permit the case to proceed to discovery.
I. Background
According to the Complaint, which the Court must accept as true in evaluating
Defendants’ Motion, Liff is a seasoned HR executive, having worked for several decades in
senior positions within the U.S. Departments of Defense and Veterans Affairs. See Compl.,
1
¶ 11. Upon retiring from civil service, Liff turned to government consulting, building a book of
business consisting mostly of federal-agency clients. See id., ¶¶ 15-18.
A. Plaintiff’s Government Contracts
After the inauguration of President Obama in 2009, Liff reached out to a member of the
administration’s transition team for the Department of Veterans Affairs to promote his skills and
suggest reforms for the agency. See id., ¶ 19. The individual he contacted, Ray Jefferson, did
not end up serving in the VA but was appointed instead as Assistant Secretary for DOL’s
Veterans’ Employment and Training Service (DOL-VETS), which provides job training and
other employment-related resources for returning service members. See id., ¶ 20. Convinced
that Liff could be of assistance to DOL-VETS, Jefferson arranged for him to be hired “as a
subcontractor under an existing contract” to that office, working with several individuals in
DOL-VETS’ Office of Agency Management and Budget to make that happen. See id., ¶ 21.
Beginning in late 2009, Liff began a series of consultancies for DOL-VETS, working as a
subcontractor to three different prime contractors. From November 2009 to March 2010, he
worked under a subcontract with For Your Information, Inc., and from April 2010 to August
2010, he subcontracted with MSTI, Inc.; both companies held contracts directly with DOL-
VETS. See id., ¶¶ 22-23. From September 2010 to December 2010, he provided consulting
services to DOL-VETS through a contract that a company named Information Experts, Inc., held
with OPM. See id., ¶ 24. DOL-VETS was able to obtain Liff’s services under that contract by
establishing an interagency agreement with OPM in which DOL-VETS could reimburse OPM
for using the latter’s contract vehicle. See id.
In March 2011, Liff’s work under the Information Experts contract expanded beyond his
DOL-VETS client to include direct work for OPM. See id., ¶ 36. Under the terms of his
2
contract with Information Experts, he was to be paid for performing discrete, fixed-price task
orders. See id., ¶¶ 36-37. Liff claims that his work was going swimmingly when, in August
2011, OPM abruptly “terminat[ed] the task order under which Liff was providing human
resources management consulting . . . to OPM.” Id., ¶ 47.
B. DOL-OIG Investigation
At least a month before the task order was terminated, however, there were signs that all
was not well from the government’s perspective with Liff’s contracts. In July 2011, after
conducting an eight-month investigation, the Department of Labor’s Office of Inspector General
(DOL-OIG) issued a final report concluding that certain contracting improprieties had taken
place at DOL-VETS during Jefferson’s tenure. See id., ¶¶ 34, 35, 38. The primary focus of the
investigation was whether Jefferson and other agency officials had improperly circumvented
federal procurement laws in retaining Liff’s services. See id., ¶ 38. The report concluded that
Jefferson and other officials had in fact acted in such a way that “reflect[ed] a consistent
disregard of federal procurement rules and regulations, federal ethics principles, and the proper
stewardship of appropriated dollars.” Id., ¶ 38; see also DOL-OIG Report No. 14-1301-0002 IA
(“DOL-OIG Report”), Cover Memorandum at 1. 1 The primary basis for this conclusion, says
Liff, is that Jefferson and his colleagues purportedly pressured certain procurement officials in
DOL-VETS to hire Liff, regardless of whether that meant disregarding strict procurement
policies. See Compl., ¶ 38. Even though Plaintiffs agree that the main purpose of the report was
1
Available at: https://www.oig.dol.gov/public/reports/DOL_OIG_VETS_Investigative_Report.pdf. Defendants
supplied a copy of the DOL-OIG report, albeit without including the cover memorandum, as Exhibit B to their
Motion. As both the report and its cover memorandum are public government documents, the Court may consider
them without converting Defendant’s Motion to Dismiss into one for summary judgment. See E.E.O.C. v. St.
Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997); Detroit Int’l Bridge Co. v. Gov’t of Canada, No.
10-476, 2015 WL 5726601, at *6 (D.D.C. Sept. 30, 2015).
3
to expose procurement improprieties originating from government officials, including Jefferson,
they contend that “Liff and his consulting services were the central focus of the [report],” id., and
that it “contained numerous blatant misstatements and false characterizations specifically
regarding Liff” that cast doubt on his honesty and integrity. See id., ¶¶ 42-43.
In Plaintiffs’ view, the retaliatory motivations of certain DOL-VETS employees have
undermined the legitimacy of the entire investigation. They allege that it came about because
several disgruntled DOL-VETS employees were displeased with certain reforms he had
proposed to senior officers, like Jefferson, within the agency. See id., ¶¶ 33-34. Liff
acknowledges that he had been “highly critical” of the agency’s budget office in various
assessment reports he submitted to the agency, and he asserts that the office’s deputy director,
Angela Freeman, and another budget-office employee, Paul Briggs, struck back against Liff and
Jefferson by lodging complaints with DOL-OIG. See id., ¶¶ 32-33, 41.
Whatever the reasons for its initiation, the investigation went forward under the auspices
of Acting Inspector General Daniel Petrole, id., ¶ 5, who directed two of his subordinates to
interview Liff as a “witness.” Id., ¶¶ 78-79. Liff cooperated, id., ¶ 78, but insists that no one
from DOL-OIG notified him that the investigation might yield a final report that reflected poorly
on his reputation, or that other witnesses – like Freeman, Briggs, or perhaps even their union
representatives – had already provided “false and vindictive accusations and characterizations of
[Liff’s] work at DOL-VETS.” Id., ¶ 35; see id., ¶ 78. After reviewing the DOL-OIG Report
upon its release in July 2011, Liff was displeased that the report repeated at least Freeman’s
assertions without indicating that she “was a person of highly suspect credibility with a strong
bias to malign both . . . Jefferson and Liff.” Id., ¶ 41.
4
Accompanying the report’s release was a cover memorandum from Petrole to Seth
Harris, then-Deputy Secretary of DOL, that summarized (inaccurately, says Liff) the contents of
the report. See id., ¶ 38. The memorandum recommended that DOL take certain follow-up
actions, including “review[ing]” the specific procurements identified in the DOL-OIG Report
and “determin[ing] what, if any, further actions should be taken.” Cover Memo. at 3.
On July 27, 2011, “DOL and DOL-OIG convened a joint press conference, announcing
the findings and conclusions in the DOL-OIG report” and thus, according to Liff, repeating the
report’s “false depictions of Liff.” Compl., ¶ 45. The press conference spawned a Washington
Post article that “asserted that Liff had received approximately $700,000 . . . for services that
could have been secured at a much lower cost through open competition” and noted that his work
included giving “advice on the ‘proper color scheme’ for offices” at DOL-VETS, thus casting
substantial doubt on whether the government had obtained good value for his services. See id.
At the end of August 2011, Deputy Secretary Harris released a follow-up memorandum
to the July 2011 DOL-OIG Report. See id., ¶ 48. Liff contends that such memorandum
“ratified” the DOL-OIG Report’s inaccurate findings by “praising DOL-OIG for its report and
setting forth concrete follow-up actions . . . relat[ing] to Liff.” Id. Specifically, Harris stated in
the memo that DOL would “‘aggressively pursue’ Liff for ‘all valid causes of action’ under, inter
alia, the False Claims Act.” Id.
According to the Complaint, the investigation, report, press conference, and responsive
memorandum are concrete acts taken by DOL and DOL-OIG that had an adverse effect on
Plaintiffs. As a result, Liff claims, he lost a “prized” invitation to speak at an annual conference
where numerous high-level federal officials – and presumably prospective clients – would be
present. Id., ¶ 51. The National Labor Relations Board also rescinded an offer for Plaintiff to
5
teach a seminar on how to manage federal employees. Id. And the Los Angeles Federal
Executive Board revoked its invitation for Liff to speak at one of its events. Id.
He also states that “most” of his consulting work had previously originated with
government officials’ reaching out to him directly by way of his website, but that all inquiries
effectively dried up in the aftermath of the government’s damaging statements about him. Id.,
¶ 52. Former federal-agency clients stopped doing business with him, including several branches
of the Department of Veterans Affairs in California. Id., ¶ 53. Finally, Liff claims that the report
and DOL memorandum caused a significant decline in his federal contracting work.
Specifically, he notes that he
ha[d] submitted competitive bids on a variety of government
contracts since the issuance of the DOL-OIG report, but with one
exception, [was not] selected for any project. Government
contractors that had expressed strong interest in teaming up with Liff
later refused to partner with him because of the adverse publicity
from the DOL-OIG report.
Id., ¶ 52. Liff does not, however, identify which agencies received his bids or which one
ultimately decided to do business with him.
C. OPM Investigation
DOL’s and DOL-OIG’s actions also triggered a collateral investigation by OPM’s
inspector general in late July 2011. Around that time, OPM’s then-director Berry held a press
conference in which he “stated, inter alia, that Liff and/or Stewart Liff & Associates, Inc. would
not be used again by OPM for consulting services, a statement reported in a Washington Post
article the next day.” Id., ¶ 50. (The Complaint does not make clear whether the article is the
same one that reported on his purportedly overvalued consulting services.)
OPM’s Office of Inspector General then set out to inquire “into how Liff’s services as a
subcontractor to OPM through the existing contract with [Information Experts] had been
6
arranged.” Id., ¶ 47. And, as previously noted, about a month later in August 2011, “Liff was
advised that OPM was terminating the task order under which Liff was providing [HR]
management consulting through [Information Experts] to OPM.” Id. The value of that
outstanding task order was, according to Liff, $350,000. See id.
The OPM investigation proceeded similarly to the one conducted by DOL-OIG. The
agency interviewed Liff in March 2012 and issued an interim report on April 2, 2013. See id.,
¶ 49. Like the DOL-OIG Report, the OPM interim report also suggested “that Liff’s services
may have been ‘wasteful’ of taxpayer resources” due to improprieties in how his services were
obtained. See id. As occurred with the DOL investigation, agency head Berry responded to the
report with a publicly issued memorandum. See id., ¶ 50. In it, alleges Liff, Berry made clear
that, “after the issuance of the DOL-OIG report” in July 2011, “he had taken steps to ‘ensure that
OPM immediately concluded any business involving [Stewart Liff & Associates, Inc.].’” Id.
(quoting OPM’s 2013 memorandum).
Although Plaintiffs’ revenue stream had already been trending downward ever since July
2011, these “subsequent actions by OPM and Berry,” Liff claims, contributed to a sharp, 97%
decline in revenue from 2011 to 2013 caused by his “broad[] preclu[sion]” from federal-
government contracting. Id., ¶ 54.
In July 2014, Plaintiffs filed a three-count Complaint against Defendants. The first,
asserted against DOL, DOL-OIG, and OPM, claims that the agencies ruined Plaintiffs’
professional reputations and effectively debarred them from government contracting without
affording them adequate process guaranteed by the Fifth Amendment. Count II, pled against
individual Defendants Petrole, Harris, Berry, and two unknown agents of DOL-OIG, seeks
damages flowing from a Fifth Amendment tort violation under Bivens v. Six Unknown Named
7
Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). Finally, Count III, asserted against
the three federal-agency Defendants, alleges that they all violated the Administrative Procedure
Act by, inter alia, terminating Liff’s outstanding task order and constructively debarring him
from government-contracting work without affording him any procedural protections.
II. Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a
complaint fails “to state a claim upon which relief can be granted.” In evaluating Defendants’
Motion to Dismiss, the Court must “treat the complaint's factual allegations as true . . . and must
grant plaintiff ‘the benefit of all inferences that can be derived from the facts alleged.’” Sparrow
v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United
States, 617 F.2d 605, 608 (D.C. Cir. 1979)) (citation omitted); see also Jerome Stevens Pharms.,
Inc. v. FDA, 402 F.3d 1249, 1250 (D.C. Cir. 2005). The notice-pleading rules are “not meant to
impose a great burden upon a plaintiff,” Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005),
who must be given every favorable inference that may be drawn from the allegations of fact.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 584 (2007).
Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6)
motion, id. at 555, “a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Twombly, 550 U.S. at 570). Plaintiff must put forth “factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. The Court need not accept as true “a legal conclusion couched as a factual allegation,” nor an
inference unsupported by the facts set forth in the Complaint. Trudeau v. Fed. Trade Comm’n.,
456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986))
8
(internal quotation marks omitted). For a plaintiff to survive a 12(b)(6) motion even if “recovery
is very remote and unlikely,” moreover, the facts alleged in the complaint “must be enough to
raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555-56 (citing Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974)).
In evaluating the sufficiency of Plaintiffs’ Complaint under Rule 12(b)(6), the Court may
consider “the facts alleged in the complaint, any documents either attached to or incorporated in
the complaint and matters of which [the court] may take judicial notice.” EEOC v. St. Francis
Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). The Court may thus consider those
materials on a motion to dismiss without treating the motion “as one for summary judgment
under Rule 56.” Fed. R. Civ. P. 12(d); Marshall v. Honeywell Tech. Solutions, Inc., 536 F. Supp.
2d 59, 65 (D.D.C. 2008).
III. Analysis
In moving to dismiss, Defendants argue that all of Plaintiffs’ three counts suffer from
fatal flaws. The Court examines each separately, looking first at the Fifth Amendment violation,
next considering Bivens, and concluding with the APA.
A. Count I (Procedural Due Process)
Plaintiffs first allege that reports and public statements issued by DOL, DOL-OIG, and
OPM tarnished their good names and had the effect of both precluding them from contracting
with the government and rendering them unable to secure work from private-sector employers.
See Compl., ¶¶ 55, 69-73. These actions, they assert, were taken without giving them adequate
notice of the allegations of misconduct and an “opportunity to be heard to meaningfully address”
them. Id., ¶ 67. In other words, the government failed to give Plaintiffs adequate procedural
9
protections under the Fifth Amendment’s guarantee that “[n]o person shall be . . . deprived
of . . . liberty . . . without due process of law.” U.S. Const. Amend. V.
“To state a claim for the denial of procedural due process, a plaintiff must allege that the
government deprived her of a ‘“liberty or property interest” to which she had a “legitimate claim
of entitlement,” and that “the procedures attendant upon that deprivation were constitutionally
[in]sufficient.”’” New Vision Photography Program, Inc. v. Dist. of. Columbia, 54 F. Supp. 3d
12, 28 (D.D.C. 2014) (quoting Roberts v. United States, 741 F.3d 152, 161 (D.C. Cir. 2014)
(brackets in original) (quoting Ky. Dep’t of Corr. v. Thompson, 490 U.S. 454, 460 (1989)).
Plaintiffs’ Fifth Amendment due-process claim is premised on the theory that, “‘[w]here a
person’s good name, reputation, honor, or integrity is at stake because of what the government is
doing to him,” that person’s liberty interest is on the line, meaning that “notice and an
opportunity to be heard are essential.’” Bd. of Regents of State Colleges v. Roth, 408 U.S. 564,
573 (1972) (quoting Wisconsin v. Constantineau, 400 U.S. 433, 437 (1971)); see Opp. at 7-8.
The Supreme Court has clarified that the Due Process Clause does not insulate
individuals from “defamatory statements by the government alone,” but rather protects against
such actions only when other, “more tangible interests such as employment” are at stake. Paul v.
Davis, 424 U.S. 693, 701 (1976) (emphases added). In seeking dismissal of this count, the
government offers two defenses – one relating to jurisdiction and the other to the merits.
1. FTCA Defense
Hoping to bypass this constitutional sand trap, the agency Defendants argue that
dismissal is warranted because Count I is merely a tort claim for defamation dressed in
constitutional garb, and that the Federal Tort Claims Act is thus Plaintiffs’ exclusive fairway to
relief. See Mot. at 7. If so, Plaintiffs’ claim must fail because the statute’s waiver of sovereign
10
immunity specifically excepts “[a]ny claim arising out of . . . libel [or] slander.” 28 U.S.C.
§ 2680(h). In addition, because Plaintiffs failed to exhaust their administrative remedies under
the FTCA, the Court lacks subject-matter jurisdiction to entertain the cause of action. Id. at 8-9.
Tidy as this disposition might be, the argument is premised on Defendants’ erroneous
characterization of the due-process claim as, “‘in essence[, a] claim[] asserting causes of action
for libel or slander.’” Id. at 8 (quoting Budik v. Dartmouth-Hitchcock Med. Ctr., 937 F. Supp.
2d 5, 15 (D.D.C. 2013)). Undoubtedly, had Plaintiffs limited their Complaint to seeking
damages resulting from “defamation by the government . . . alone,” Paul, 424 U.S. at 701, the
question would be a closer one. But the allegations in the Complaint allege more than just
defamation; Plaintiffs assert, for instance, that the government unofficially debarred them from
future contracts. See Compl., ¶¶ 54, 64, 72. And they seek more than just monetary relief for
past harms – namely, a wide range of injunctive remedies. See Compl. at 35-37. It is thus clear
that Count I cannot be dismissed on the basis that Plaintiffs “in essence” have pleaded a tort
claim for defamation.
2. Failure to State a Claim
Moving to the merits, the next question is whether the Complaint plausibly alleges that
the three agencies here, either individually or collectively, have actually cast doubt on Plaintiffs’
“good name[s], reputation[s], honor, or integrity,” Roth, 408 U.S. at 573 (quotation marks and
citation omitted), and have worked a “tangible change in [their] status” as a result. Kartseva v.
Dep’t of State, 37 F.3d 1524, 1527 (D.C. Cir. 1994).
Honesty and Integrity
On the first point, Defendants argue that the original, offending DOL-OIG Report “never
concluded that Liff was dishonest, untrustworthy, or lacked integrity,” and thus whatever harm
occurred to his reputation is not actionable under Roth and its progeny. See Opp. at 12-13.
11
Reading the Complaint in the light most favorable to Plaintiffs, however, the Court cannot
concur.
While Defendants are correct that many of Plaintiffs’ glosses on the DOL-OIG Report
are exaggerated – for instance, contrary to the presentation in the Complaint, the Report appears
never to have concluded that Liff was “sitting around doing nothing” or that his services
included merely “picking wall colors,” compare Compl., ¶ 42 with DOL-OIG Report at 19-20 –
it is not apparent that the report as a whole could not reasonably be construed to cast a shadow
on Liff’s honesty and integrity, especially given its decision to include numerous accusations that
he had engaged in false-billing practices. The critical section of the report includes findings
relevant to the question of whether “[Assistant Secretary] Jefferson and [Deputy Assistant
Secretary] McWilliams abused their authority by giving Stewart Liff an advisory and assistance
contract and coercing [DOL-]VETS into manipulating existing federal contracts in order to hire
Liff without the benefit of competition.” DOL-OIG Report at 4. The report is a carefully
crafted, edited, and curated presentation of information, all of which, presumably, was selected
because it was deemed pertinent in answering that question.
To that end, the report contains numerous statements from interviewees, some hearsay,
that, taken together, suggest that Liff was greedy, engaged in unethical and unlawful billing
practices, and offered at best nominal value to the government. As an example, witnesses state
or suggest, inter alia, that Liff’s services were twice the cost of their commercial value, see id. at
8; that Liff improperly withheld a “‘secret’ deliverable” from his prime contractor, FYI, Inc., in a
way that was “upsetting and inappropriate,” id. at 9; that Liff spent less time working on his
reports than he did “taking calls from [Jefferson] on unrelated matters” and that he performed
tasks “outside the [statement of work],” id.; that he “abused his contractor position because he
12
would often hang out in VETS with nothing to do and simply bill VETS for the hours,” id. at 14;
that “even though Liff was” reputed to be “being paid hundreds of thousands of dollars in airfare,
per diem and salary, Liff would still voucher his metro fare cards which [the interviewee] felt
was appalling,” id. 14-15; that the circumstances of Liff’s work were analogous to another
“contractor who was paid enormous amounts of money for producing next to nothing,” id. at 15;
and, that there was a “problem implementing [Liff’s] visual management project because VETS
found out that the colors that Liff wanted the walls to be painted were not possible under General
Services Administration (GSA) regulations.” Id. at 19-20. In sum: the statements, made by third
parties but purposefully included by DOL-OIG in its report, give the unmistakable impression
that Liff had few scruples about acting unethically, unlawfully, dishonestly, and ineffectively.
The government cannot succeed on its Motion simply because it believes its interpretation of the
report is the more sensible one.
To the extent the government contends that it did not endorse certain potentially
defamatory statements, but “merely relayed” them, that is not the case. The report’s authors
gave at least some credence to witnesses in concluding that “Jefferson’s insistence upon
retaining the services of [Liff and two other individuals] led to . . . the acceptance of gratuitous
services,” and that “the total payment of more than $700,000 to secure Liff’s services for a
period of 16 months appears to be excessive.” DOL-OIG Report Cover Memorandum at 1;
DOL-OIG Report at 26. In addition, DOL’s memorandum response appears to signal its
agreement with the report’s contents, given that, as a result of the report, DOL decided to
“‘aggressively pursue’ Liff for ‘all valid causes of action’ under, inter alia, the False Claims
Act.” Compl., ¶ 48. Similarly, OPM’s memorandum in which it concluded that it had “taken
steps” in 2011 “to ‘ensure that OPM immediately concluded any business involving [Stewart
13
Liff & Associates, Inc.]’” sufficiently suggests that a pall had been cast over Plaintiffs’ honesty
and integrity. See id., ¶ 50. The allegations thus suffice to allow their claim to survive at this
stage.
Tangible Change in Status
Governmental defamation “alone,” of course, offends no liberty interest protected by the
Due Process Clause. See Paul, 424 U.S. at 701. Only if the defamation is accompanied by a
stigma resulting in a “tangible change in status” will a plaintiff state a viable Fifth Amendment
claim for deprivation of a liberty interest without due process of law. Kartseva, 37 F.3d at 1527.
In other words, the Due Process Clause protects against “‘governmental defamation’” that
“potentially constrains [a plaintiff’s] future employment opportunities,” so long as the
government’s action also “constitute[s] an adjudication of [the plaintiff’s] status under law.” Id.
(quoting Siegert v. Gilley, 500 U.S. 226, 233-34 (1991)).
In this Circuit, a “tangible” and thus constitutionally protected change in status may be
demonstrated in two ways: by formal disqualification or by broad preclusion. See Abdelfattah v.
U.S. Dep’t of Homeland Sec., 787 F.3d 524, 539 (D.C. Cir. 2015). Under the first, if the
relevant agency’s “action formally or automatically excludes [Plaintiffs] from work on some
category of future [agency] contracts or other government employment opportunities, that action
changes [their] formal legal status and thus implicates a liberty interest.” Kartseva, 37 F.3d at
1528. “Second, if [the agency’s] action does not have this binding effect, but nevertheless has
the broad effect of largely precluding [Plaintiffs] from pursuing [their] chosen career[s], . . . that,
too, would constitute a ‘status change’ adequate to implicate a liberty interest.” Id. On its face,
the Kartseva standard is sufficiently capacious to preclude dismissal here given the record before
the Court, which will now look at the two agencies separately.
14
a. OPM
Plaintiffs’ claim against OPM fits comfortably within the first prong of Kartesva’s status-
change test. In that case, Zhanna Kartseva was employed by a company named Statistica that
held language-translation contracts with the U.S. State Department. Id. at 1525. After
performing Russian-translation work for several months on a particular contract, Statistica was
informed by the government that a background check on Kartseva had raised “several significant
counterintelligence concerns” and that she was “ineligib[le] for assignment to a [State
Department] contract or project.” Id. at 1526 (internal quotation marks and citations to record
omitted). The government “asked Statistica to ‘act on’” the government’s concerns, and
Statistica promptly fired Kartseva. Id. Kartseva sued, claiming she was denied adequate process
under the Fifth Amendment. Id. at 1525.
The district court dismissed her suit for failure to state a claim, but the D.C. Circuit
reversed, concluding that the “present record” on a motion to dismiss was “cloudy as to the
extent of the [government’s] disqualification” of Kartseva. Id. at 1528. Because the law of the
circuit held that “suspension from one government department implicates a liberty interest,” id.
(citing Reeven Aleutian Airways v. United States, 982 F.2d 594, 598 (D.C. Cir. 1993)), the court
concluded that Kartseva had pled sufficient facts to survive a motion to dismiss, and that the
district court on remand should “determine if State made a binding determination to disqualify
Kartseva from any future contracts other than the particular State contract with Statistica on
which [she] was working.” Id. at 1528. If so, Kartseva’s due-process claim would survive. Id.
The posture of Plaintiff’s claim here – at least regarding OPM – is highly analogous.
Even though that agency took “no official debarment action (that is, action under the published
rules governing public contracting) against” Liff and his company, see id., the Complaint
includes statements from OPM’s director indicating that Plaintiffs were de facto debarred or
15
suspended from contracting with OPM. See Compl., ¶ 54. “De facto debarment occurs when a
contractor has, for all practical purposes, been suspended or blacklisted from working with a
government agency without due process, namely, adequate notice and a meaningful hearing.”
Phillips v. Mabus, 894 F. Supp. 2d 71, 81 (D.D.C. 2012). A plaintiff may establish a de facto
debarment in two ways: “‘1) by an agency’s statement that it will not award the contractor future
contracts; or 2) by an agency’s conduct demonstrating that it will not award the contractor future
contracts.’” Id. (quoting TLT Constr. Corp. v. United States, 50 Fed. Cl. 212, 215-16 (2001)).
OPM’s actions – including Berry’s 2011 press conference and his 2013 memorandum
response to the OPM investigation – provide some evidence of both. Berry’s allegedly
unequivocal statement, for instance, that Plaintiffs “would not be used again by OPM for
consulting services,” Compl. ¶ 50, is a crystal-clear “agency[] statement that it will not award the
contractor future contracts.” Mabus, 894 F. Supp. 2d at 81. The 2013 memorandum reinforces
this point: Berry’s statement that he “took steps” in July 2011 to “immediately conclude[] any
business involving” Plaintiffs suggests not only that OPM canceled any existing work but would
also cease future business interactions with them. See Compl., ¶ 50. What steps Berry and OPM
in fact took are, at present, unclear. But at a minimum, OPM undeniably acted on this promise
by terminating an outstanding task order under which Liff was to earn over $175,000 in contract
payments. See OPM Interim Investigative Report of April 2, 2013, at 28 (stating that “OPM
exercised its right to terminate [a contract with Information Experts for $331,248] in August
2011,” under which Liff was budgeted to receive $176,799), available at
https://www.opm.gov/our-inspector-general/reports/2013/interim-investigative-report-improper-
contracting-and-procurement-practices-utilized-to-circumvent-the-competitive-bid-process.pdf.
16
These actions suffice to nudge Plaintiffs’ de facto debarment claim “across the line from
conceivable to plausible.” Twombly, 550 U.S. at 570; see Myers & Myers, Inc. v. U.S. Postal
Service, 527 F.2d 1252, 1258 (D.C. Cir. 1975) (reversing district court’s dismissal of
contractor’s claim that Postal Service “refus[ed] to renew” its contract without adequate
procedural protections where plaintiffs plausibly alleged that non-renewal was “part of a
‘sanction’ taken against them for claimed irregularities in [its] operating procedures”); Mabus,
894 F. Supp. 2d at 81 (concluding that plaintiff subcontractor survived motion to dismiss where
it alleged Navy “pulled back” $700,000 that had been allocated to its subcontract under a prime
contract, announced its intention not to award plaintiff any more work under that contract, and
sent internal emails indicating that plaintiff would not get any funding in the future under two
specific contracting vehicles); Leslie & Elliott Co. v. Garrett, 732 F. Supp. 191, 196 (D.D.C.
1990) (“While the Navy may well have been justified in seeking to avoid further contracts with
the plaintiff, that is not the issue. Once the Navy has determined that it should no longer do
business with the plaintiff, fair play and due process dictates that the Navy follow its debarment
procedures,” including notice and a hearing.).
b. DOL and DOL-OIG
Plaintiffs’ claims against DOL and DOL-OIG rest on a more slender reed, but they, too,
survive the government’s Motion. Because the Complaint sets forth no facts that would satisfy
the first prong of Kartseva’s status-change inquiry as to those activities – i.e., a binding, even if
informal, disqualification from agency contracting – Plaintiffs must rely on the second Kartseva
prong, under which they must show that the government broadly precluded them from pursuing
their “chosen career.” 37 F.3d at 1528; see id. at 1529 (court must consider whether government
defendant’s actions “interfere[d] with [plaintiff’s] constitutionally protected ‘right to follow a
chosen trade or profession’”) (quoting Cafeteria Workers v. McElroy, 367 U.S. 886, 895-96
17
(1961)). “The key inquiry . . . is this: Has the government, by attacking personal or corporate
reputation, achieved in substance an alteration of status that, if accomplished through formal
means, would constitute a deprivation of liberty?” Trifax Corp. v. District of Columbia, 314
F.3d 641, 644 (D.C. Cir. 2003). Only if Plaintiffs can prove that a government agency “has
seriously affected, if not destroyed, [their] ability to obtain employment [or contracts] in [their]
field” will they succeed in showing a “broad preclusion” from their chosen profession. Id.(quotation marks and citations omitted, brackets in original); see also Alexis v. Dist. of
Columbia, 44 F. Supp. 2d 331, 341 (D.D.C. 1999) (plaintiff “must demonstrate an injurious
impact . . . beyond a disadvantage or impediment”) (quotation marks and citation omitted).
In attempting to make this showing, Plaintiffs marshal two key facts. First, they allege
that Liff and his company have suffered a near-total loss of revenue, which they attribute to the
DOL-OIG report and DOL’s “ratification” of the report in its responsive memorandum. See
Compl, ¶ 54. According to Plaintiffs, Liff “was on track to earn more than $300,000 by [the end
of 2011], almost all of which was generated by government contracts[,] . . . [but that by] the end
of 2013, that amount had plummeted to about $10,000 per year, a 97 % decrease.” Id. In
addition, Liff’s “attempt[s] since July 2011 to ‘re-brand’ himself as a human resources expert for
private companies” have been met with little success. Id., ¶ 55. Second, Plaintiffs allege with
less specificity that they have “submitted competitive bids on a variety of government contracts
since the issuance of the DOL-OIG report, but with one exception, ha[ve] not been selected for
any project.” Id., ¶ 52. In a similar vein, prime contractors that had previously “expressed
strong interest in teaming up with Liff later refused to partner with him because of the adverse
publicity from the DOL-OIG report.” Id.
18
Although Plaintiffs have neither indicated how many “competitive bids” they submitted
nor stated which agencies rejected those bids, the allegations taken together state a plausible
claim that both DOL-OIG, by generating the report, and DOL, by publicly agreeing with its
contents, have “effectively put [Plaintiffs] out of business,” Old Dominion Dairy Prods., Inc. v.
Sec’y of Def., 631 F.2d 953, 963 (D.C. Cir. 1980), by limiting their “ability to obtain . . .
contracts” in the field of human-resources management. See Trifax Corp., 314 F.3d at 644.
Significantly, Defendants have not argued that the DOL-OIG Report and the DOL
memorandum have had no effect on the government’s subsequent procurement decisions relating
to Liff and his company. In Kartseva, this precise type of uncertainty led the court to conclude
that further factual development was appropriate in part to clarify “the extent to which [the
government’s] action as to Kartseva would normally be available to and would legally affect
other government agencies or private employers in their decisions whether to employ her or
permit her to work on government contracts.” 37 F.3d at 1530 (emphasis added).
Such uncertainty similarly shadows the record here. As an example: Part 9 of the Federal
Acquisition Regulation (FAR) requires contracting officers, as a prerequisite to award, to make a
“responsibility” determination, which includes making an affirmative finding that the contractor
has “a satisfactory record of integrity and business ethics.” 48 C.F.R. §§ 9.103(b), 9.104-1(d).
The rules explain that, in making such findings, the “contracting officer should use” information
from “sources such as publications . . . [and] Government agencies.” § 9.105-1(c)(5) (emphasis
added). These rules tend to suggest that the government must, or at least should, consider
documents such as the DOL-OIG Report or other official communications like the DOL
memorandum in making responsibility determinations. In addition, the FAR also explains the
common-sense principle that prime contractors must also ensure that their subcontractors meet
19
the same standards for business ethics and integrity. See § 9.104-4. With no additional
information from the government at this stage about how the communications at issue here
would factor into the “responsibility determination” process – or on other steps bearing on the
government’s decisions to contract – the Court cannot definitively say that they would have no
effect on Plaintiffs’ ability to find future government-contracting work. Accord Old Dominion
Dairy, 631 F.2d at 966 & n.24 (concluding that contracting officer’s disparaging responsibility
determination of prospective contractor was sufficient to implicate liberty interest, particularly
where “the determination that Old Dominion lacked integrity had already been communicated
through Government channels and would undoubtedly have been recommunicated every time [it]
bid on a subsequent contract”).
Admittedly, on summary judgment, Plaintiffs’ evidence will be put to the test. It may be
that their allegations of lost opportunities are simply histrionic, or that, even if the government
could have relied on the challenged documents in denying work to Liff and his company, it did
not do so in any of the procurement decisions cited in the Complaint. See Trifax Corp., 314 F.3d
at 644 (concluding on summary judgment that, where “the record demonstrates that [the
contractor] ‘won some and lost some’ in retaining and bidding on government contracts after [a
critical] OIG Report was released,” the plaintiff “failed to show anything remotely close to
‘broad preclusion’” from government contracting) (quoting Trifax Corp. v. Dist. Of Columbia,
No. 98-2824, ECF No. 166, Mem. Op. at 14 (D.D.C. Nov. 2, 2001)). But those are questions for
another day.
B. Count II (Bivens Claim for Damages)
Pointing to the same actions that undergird their due-process claim against the agency
Defendants, Plaintiffs also seek damages from three senior officials – Berry from OPM, Harris
20
from DOL, and Petrole from DOL-OIG – and two unknown DOL-OIG investigators, all in their
individual capacities. Plaintiffs thus invoke Bivens v. Six Unknown Named Agents of Federal
Bureau of Narcotics, 403 U.S. 388 (1971), which “established that the victims of a constitutional
violation by a federal agent have a right to recover damages against the official in federal court
despite the absence of any statute conferring such a right.” Carlson v. Green, 446 U.S. 14, 18
(1980).
The individual Defendants seek dismissal on three bases: an expired statute of
limitations, the absence of a Bivens remedy for the claimed injury, and qualified immunity. See
Mot. 16-27. The Court will address each in turn, concluding that the Bivens claim may proceed
at this stage against Berry, Harris, and Petrole, but not against the two unnamed officers from
DOL-OIG.
1. Statute of Limitations
Defendants first contend that the Bivens action is untimely because it falls within the
District of Columbia’s one-year statute of limitations governing defamation actions. See Mot. at
16 (citing D.C. Code § 12-301(4)). Plaintiffs respond that this is not the operable statute. See
Opp. at 24-25.
“As is often the case in federal civil law, there is no federal statute of limitations
expressly applicable to” a given claim. See DelCostello v. Int’l Bhd. of Teamsters, 462 U.S.
151, 158 (1983). To fill the gap, courts generally “‘borrow’ the most suitable statute or other
rule of timeliness from some other source,” which typically is “the most closely analogous”
state-law timeliness rule. Id. Such “borrowing” is appropriate whether the civil remedy was
crafted by the legislature or, as in a Bivens action, implied directly from the Constitution. See
21
Doe v. U.S. Dep’t of Justice, 753 F.2d 1092, 1114 (D.C. Cir. 1985) (applying state-law
borrowing to Bivens claim).
Defendants argue that Count II must be dismissed because all of the critical actions – i.e.,
Petrole’s publication of the DOL-OIG report in July 2011, Harris’s publication of the DOL
memorandum in August 2011, and Berry’s release of his April 2013 letter – occurred over a year
before Plaintiffs filed suit in July 2014. See Mot. at 16-17. One year is appropriate, they argue,
because the D.C. Circuit in Doe held that the District’s one-year limitation period governing
defamation suits was “most analogous” to a Bivens claim that the government had “deprive[d]
[plaintiff] of a constitutionally protected liberty interest in reputation without due process.” 753
F.2d at 1105, 1111, 1114. The court reached that conclusion in part because it concluded that
“damage to reputation . . . is central to the [plaintiff’s] claim” – and thus defamation appears the
most closely analogous state-law tort – and also because she sought a “traditional damages
remedy to which she would be entitled in a common law defamation action.” Id. at 1114.
Four years after Doe, the Supreme Court in Owens v. Okure, 488 U.S. 235 (1989), sought
to remedy an inconsistency problem that had arisen in lower courts’ application of the
“borrowing” rule in a related context: actions under 42 U.S.C. § 1983 for deprivations of
constitutional rights by state actors. In Owens, the Court noted:
Some courts found analogies in common-law tort, others in contract
law, and still others in statutory law. Often the result had less to do
with the general nature of § 1983 relief than with counsel’s artful
pleading . . . . Consequently, plaintiffs and defendants often had no
idea whether a federal civil rights claim was barred until a court
ruled on their case. Predictability, a primary goal of statutes of
limitations, was thereby frustrated.
Id. at 240 (footnote omitted). Part of the confusion, the Court noted, was that constitutional tort
claims “have no precise state-law analog.” Id. at 249. As a result, certain analogies to state-law
causes of action, like intentional torts, were “particularly inapposite” given the “wide spectrum
22
of claims which § 1983 has come to span.” Id. To remedy the pervasive inconsistencies in such
actions, the Court held that, “where state law provides multiple statutes of limitations for
personal injury actions, courts considering § 1983 claims should borrow the general or residual
statute for personal injury actions.” Id. at 249-50.
Appealing to Owens, Plaintiffs argue that the District’s residual statute of limitations,
which provides a three-year period, must apply here, notwithstanding the D.C. Circuit’s decision
four years earlier in Doe. See Opp. at 25 (citing D.C. Code § 12-301(8)). Although Plaintiffs do
not make the point directly, it follows from their position that they believe Doe has been
overruled. That argument has some appeal. Doe itself relied on the near indistinguishability of
Bivens and § 1983 actions in concluding that Carey v. Piphus, 435 U.S. 247 (1978) – a case
concerning damages principles in § 1983 actions – applied with equal force to Bivens claims.
See Doe, 697 F.2d at 1123 (“By its terms, Carey explicitly governs only suits brought
under . . . § 1983. But it would be difficult to defend a refusal to extend the holding of the case
to . . . Bivens actions. The bodies of law relating to the two forms of litigation have been
assimilated in most other respects.”); accord Williams v. Hill, 74 F.3d 1339 (D.C. Cir. 1996).
At the same time, although the D.C. Circuit ineluctably concluded that, under Owens,
§ 1983 claims must be governed by the District’s three-year limitations period, see Earle v. D.C.,
707 F.3d 299, 305 (D.C. Cir. 2012), the court expressly declined to consider Owens’s
applicability to federal Bivens claims. See id. at 303 n.3 (“The federal defendants are not before
us and so we treat only [the] section 1983 claim.”). Neither party has expressly addressed
whether Doe remains good law. Without the benefit of more thorough briefing on this point, and
recognizing that the law appears sufficiently unsettled, the Court is unwilling to conclude that the
action is plainly time barred. See Doe, 753 F.2d at 1115 (court may dismiss claim as time barred
23
only “when it appears from the face of the complaint that the relevant statute of limitations bars
the action”). Defendants, of course, may raise the issue again in a motion for summary
judgment.
2. Absence of Bivens Remedy
Defendants next contend that the Supreme Court has “declined to adopt a Bivens remedy
for reputational harm,” and that damages are thus unavailable to Plaintiffs here. See Mot. at 17
(citing Siegert v. Gilley, 500 U.S. 226 (1991)). Undeniably, neither the Supreme Court nor the
D.C. Circuit has affirmatively recognized a Bivens remedy for “reputational harm.” But
Defendants are wrong to claim that the Supreme Court has expressly declined a damages remedy
for such a claim. Instead, the Court in Siegert reiterated the well-established rule that
governmental defamation, standing alone, does not create a liberty interest safeguarded by the
Fifth Amendment. See 500 U.S. at 233-34. It thus had no occasion to consider whether,
assuming the plaintiff had pled a protected liberty interest, he would have recourse to a damages
remedy under Bivens. Its dictum, therefore, that “damage[s] . . . may be recoverable under state
tort law but . . . not . . . in a Bivens action” is merely a descriptive statement of the outcome in
that case and carries no weight in deciding the issue before the Court here. Id. at 234.
Be that as it may, there is similarly no precedent in the Supreme Court or this Circuit
holding that procedural due-process violations necessarily permit a damages remedy. But see,
e.g., Arar v. Ashcroft, 585 F.3d 559, 597 (2d Cir. 2009) (“A deprivation of procedural due
process rights can give rise to a Bivens claim under our case law.”). And, since the time of its
decision in Bivens, the Supreme Court “has proceeded cautiously in implying additional federal
causes of action for money damages.” Meshal v. Higgenbotham, 804 F.3d 417, 421 (D.C. Cir.
2015). Defendants are thus correct to argue that a damages remedy may not be warranted here.
24
Whether that is so, however, need not be decided at this point. As the Court made clear
in Section III.A, supra, Plaintiffs have made out a plausible due-process claim – one that, upon
further factfinding, may or may not vanish into the ether. It thus appears both ill advised and
premature to pronounce on the availability of a Bivens remedy before deciding the threshold
question of whether a due-process violation has transpired. This issue, too, must await
subsequent resolution.
3. Qualified Immunity
Defendants also move to dismiss on grounds of qualified immunity, which “protects
government officials ‘from liability for civil damages insofar as their conduct does not violate
clearly established statutory or constitutional rights of which a reasonable person would have
known.’” Pearson v. Callahan, 555 U.S. 223, 231 (2009) (quoting Harlow v. Fitzgerald, 457
U.S. 800, 818 (1982)). The doctrine “gives government officials breathing room to make
reasonable but mistaken judgments” and “protects ‘all but the plainly incompetent or those who
knowingly violate the law.’” Ashcroft v. al-Kidd, 131 S. Ct. 2074, 2085 (2011) (quoting Malley
v. Briggs, 475 U.S. 335, 341 (1986)).
In determining whether an official is protected by qualified immunity, “the Court must
consider [1] whether the facts, viewed in the light most favorable to the plaintiff, establish a
violation of a constitutional right and, if so, [2] whether that right was clearly established at the
time of the alleged violation.” Mpoy v. Fenty, 901 F. Supp. 2d 144, 157 (D.D.C. 2012) (citing
Pearson, 555 U.S. at 232). “The Court has the discretion to decide ‘which of the two prongs of
the qualified immunity analysis should be addressed first in light of the circumstances in the
particular case at hand.’” Id. at 158 (quoting Pearson, 555 U.S. at 236). It addresses both below.
25
Violation of a Constitutional Right
The Court has already concluded that Plaintiffs at this stage have adequately pled a
violation of due process by the agency Defendants. But the qualified-immunity question is more
specific: have Plaintiffs’ allegations also established that “each Government-official defendant,
through the official’s own individual actions, has violated the Constitution”? Iqbal, 556 U.S. at
676. The Court concludes that their allegations suffice as to the three senior officers named in
the Complaint – Berry, Petrole, and Harris – but not as to the two unnamed agents.
Defendant Berry is most straightforward: the Complaint alleges that he expressly forbade
OPM from contracting with Plaintiffs and that he “had taken steps” to conclude any existing
business with them. See Compl., ¶ 50. Defendants nonetheless counter that “Berry is not even
alleged to have made any false statements about Liff.” Mot. at 26. Even assuming that is so, a
false statement is not a necessary element of a de facto debarment claim, and thus its absence
will not raise the shield of qualified immunity. See Mabus, 894 F. Supp. 2d at 82 (“[C]ategorical
statements that contractors will not be awarded any future contracts may amount to a de facto
debarment.”); Kartseva, 37 F.3d at 1528.
Plaintiffs have similarly alleged that individual actions taken by Harris and Petrole had
the broad effect of precluding them from government contracting. That is enough under
Kartseva and its successors to state a plausible due-process violation, which requires only that a
government actor’s “‘charges that the contractor lacks honesty or integrity’” have “‘the broad
effect of largely precluding [it]’” from its chosen field of government contracting. Trifax Corp.,
314 F.3d at 644 (quoting Old Dominion Dairy, 631 F.2d at 955-56, and Kartseva, 37 F.3d at
1528, respectively). Contrary to what Defendants claim, the “broad preclusion” standard has
never required a government defendant to himself take additional steps, beyond his derogatory
speech, to carry out that preclusion. See Old Dominion Dairy, 631 F.2d at 955-56 (“[W]e hold
26
that when the Government effectively bars a contractor from virtually all Government work due
to charges that the contractor lacks honesty or integrity, due process requires that the contractor
be given notice . . . and some opportunity to respond to the charges before adverse action is
taken.”). Plaintiffs’ claim that they were “effectively put . . . out of business” by Petrole’s public
release of the DOL-OIG report, Harris’s memorandum response, and Harris’s press-conference
statements suffices at this stage to deny them both qualified immunity. See id. at 963.
The Complaint fails, however, to adequately plead that the “Two Unknown Agents of
DOL-OIG” who allegedly “interviewed Liff on or about March 22, 2011 in connection with a
DOL-OIG investigation” violated Plaintiffs’ constitutional rights. See Compl., ¶ 6. The only
allegation made against these two individuals is that they interviewed him in connection with the
DOL-OIG investigation without “appris[ing Liff] of the false and vindictive accusations” lodged
against him, id., ¶ 35, thereby depriving him of a “meaningful opportunity to address and be
heard regarding [the] same.” Id., ¶ 78. But the mere fact that the interview “resulted in an
official report,” id., ¶ 79 (note the passive voice), which, due to actions outside those agents’
control, might have ultimately resulted in depriving Plaintiffs of protected liberty interests is
insufficient to state a claim for damages. Plaintiffs seeking a Bivens remedy must “plead that
each Government-official defendant, through the official’s own individual actions, has violated
the Constitution.” Iqbal, 556 U.S. at 676 (emphasis added). The allegations against the two
unknown agents fail to meet that standard, and the claims against them will be dismissed.
Clearly Established Right
The Court must also consider whether the due-process right asserted here was clearly
established at the time of the alleged violation. See Pearson, 555 U.S. at 232. To reject an
official’s claim of qualified immunity, “the unlawfulness” of his action must be apparent “in the
light of pre-existing law.” Atherton v. Dist. of Columbia Office of Mayor, 567 F.3d 672, 689-90
27
(D.C. Cir. 2009) (quoting Anderson v. Creighton, 483 U.S. 635, 640 (1987)) (quotation marks
omitted). If the “contours of the constitutional right that [Defendants] are accused of violating”
are not “‘sufficiently clear that a reasonable official would understand that what he is doing
violates that right,’” Navab-Safavi v. Glassman, 637 F.3d 311, 317 (D.C. Cir. 2011) (quoting
Anderson, 483 U.S. at 640), a government officer is “entitle[d] not to be forced to litigate the
consequences of [his] official conduct.” Mitchell v. Forsyth, 472 U.S. 511, 527 (1985).
In pleading qualified immunity, Defendants argue primarily that “Liff has not alleged the
deprivation of a clearly established constitutional right” because “the Complaint at best raises a
garden-variety tort claim for defamation, not a violation of the Constitution.” Mot. at 23-24.
This argument misses the mark, as it simply rehashes the unsuccessful defense to Plaintiffs’
constitutional claim. As a result – and to their detriment – Defendants spend most of their time
arguing that Plaintiffs do not plead a viable constitutional claim, rather than contending that the
rights asserted are not clearly established.
Even if they had taken the latter position, however, freedom from a de facto debarment is
a clearly established right under D.C. Circuit precedent. See Wilson v. Layne, 526 U.S. 603, 617
(1999) (qualified-immunity analysis looks to “cases of controlling authority in [the relevant]
jurisdiction at the time of the incident”). As discussed in Part III.A.2, supra, the D.C. Circuit in
1994 offered two specific scenarios in which a government contractor suffers a deprivation of its
liberty interest: through formal exclusion or through broad preclusion from government
contracting. Kartseva, 37 F.3d at 1527. The necessary elements of such a constitutional
violation have thus been in place for well over twenty years, if not longer, as much of Kartseva’s
reasoning rested on the Circuit’s 1980 opinion in Old Dominion Dairy, 631 F.2d at 961 n.17 &
963-94. Subsequent opinions have offered numerous applications of those principles in varying
28
contexts such that “‘the contours of the right’” to enjoy adequate process before suffering de
facto debarment “‘are clear.’” Dukore v. Dist. of Columbia, 799 F.3d 1137, 1144 (D.C. Cir.
2015) (quoting Reichle v. Howards, 132 S. Ct. 2088, 2094 (2012)); see also, e.g., Commercial
Drapery Contractors, Inc. v. United States, 133 F.3d 1, 6 (D.C. Cir. 1998) (“An agency may not
impose even a temporary suspension without providing the ‘core requirements’ of due process:
adequate notice and a meaningful hearing.”); Taylor v. Resolution Trust Corp., 56 F.3d 1497,
1506 (D.C. Cir. 1995) (“[G]overnment action precluding a litigant from future employment
opportunities will infringe upon his constitutionally protected liberty interests only when that
preclusion is either sufficiently formal or sufficiently broad.”). Plaintiffs’ asserted due-process
right is thus sufficiently clear to deny qualified immunity to Petrole, Harris, and Berry.
C. Count III (Administrative Procedure Act)
In their final count, Plaintiffs allege that the three agency Defendants violated the
Administrative Procedure Act. They argue that (1) the DOL-OIG Report and DOL
memorandum were “arbitrary and capricious” and “have resulted in, and/or substantially
contributed to[] a constructive or de facto debarment” in violation of the Fifth Amendment; and
(2) OPM’s termination of Information Experts’ outstanding task order was also “arbitrary and
capricious” and violated Plaintiffs’ “property interest” in his subcontract, also in violation of the
Fifth Amendment. See Compl., ¶¶ 88-92.
The APA allows plaintiffs to challenge “[a]gency action made reviewable by statute” and
“final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. § 704.
Asserting that no statute other than the APA makes reviewable any of the challenged agencies’
actions here, Plaintiffs insist that the DOL-OIG Report, the DOL memorandum, and OPM’s
decision to terminate the task order are all final agency actions under § 704, permitting review
29
under the APA’s “‘generic cause of action in favor of persons aggrieved by agency action.’”
Trudeau, 456 F.3d at 188 (quoting Md. Dep’t of Human Res. v. Dep’t Health & Human Servs.,
763 F.2d 1441, 1445 n.1 (D.C. Cir. 1985)).
Whether or not that is so, the problem for Plaintiffs is that the only articulated basis for
their APA grievance is that the relevant agency actions “resulted in, and/or substantially
contributed to, a constructive or de facto debarment of Plaintiffs from government consulting
opportunities . . . [which] violated Liff’s liberty interest in pursuing his chosen profession . . .
under the Due Process Clause of the Fifth Amendment.” Compl., ¶ 92 (emphasis added). But
that is precisely the focus of Count I, and the Court can discern no difference in either applicable
legal standards or available remedies that would render a parallel APA challenge non-
duplicative.
A close reading of the Complaint’s prayer for relief makes this quite clear. The remedies
stated therein are easily categorized into three types. First is the claim for compensatory and
punitive damages. Those would not be available under the APA, which only permits actions
“seeking relief other than money damages.” 5 U.S.C. § 702 (emphasis added). Second is
injunctive relief aimed at removing the injurious material from the public domain. See Compl. at
35 (seeking removal of documents from government websites). Finally, Plaintiffs request that
the Court force Defendants to proactively undo the harm caused by their actions by, for example,
“issu[ing] a public retraction” of their report and memoranda, “deem[ing]” Liff “to be a
responsible contractor with a satisfactory record of performance,” providing a “name clearing
hearing,” and “pay[ing] for a public relations firm” to help Plaintiffs scrub the internet of any
references to his misconduct relating to the challenged documents. Id. at 35-36.
30
In short, apart from the monetary damages just mentioned, Plaintiffs’ remedial strategy is
directed exclusively towards fixing prospectively whatever reputational harm was inflicted upon
them by Defendants. But all of these remedies are available under Count I, and Plaintiffs have
identified no legal right beyond their Fifth Amendment due-process right that would enlarge the
scope of Defendants’ liability. See 5 U.S.C § 704 (APA only permits judicial review of agency
actions “for which there is no other adequate remedy in a court”). In fact, the only effect of
bringing such a claim under the APA’s generic cause of action would be to substantially narrow
the scope of this Court’s review to only those actions properly deemed “final” under § 704. See
Trudeau, 456 F.3d at 187 (“The problem with relying on the APA . . . is that § 704 limits causes
of action under the APA to final agency action.”) (internal citation and quotation marks omitted).
Having already upheld the facial sufficiency of Plaintiffs’ due-process claim, the Court
will dismiss their APA challenge as duplicative. See Dobkin v. Johns Hopkins Univ., No. 93-
2228, 1994 WL 146760, at *8 (D. Md. Jan. 25, 1994) (dismissing plaintiff’s APA claim as
duplicative of his due-process claim).
IV. Conclusion
For these reasons, the Court will grant in part and deny in part Defendants’ Motion to
Dismiss. A separate Order so stating will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: January 8, 2016
31